The vulnerability in Visual Studio Code's URL handler, specifically the `extensions/git` module, allows attackers to craft malicious links that trick the IDE into executing unintended commands on the victim's computer. The bug is due to an argument injection vulnerability in the `git.clone` command, which can be exploited by injecting options like `--upload-pack` or other transport layers, allowing attackers to gain control over the remote repository and potentially pivot into the company's internal network. Microsoft has since patched the issue with a fix that validates the scheme of the URL against a pre-established allow list, preventing this type of attack. Developers are advised to upgrade their IDE to the latest version and exercise caution when opening foreign links.